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Here's Why it is Worth Investing in Cintas (CTAS) Stock Now

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·3 min read
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Cintas Corporation CTAS currently boasts robust prospects on strength across its end markets, growth investments, and a sound capital-deployment strategy.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Rank #2 (Buy) company has a market capitalization of $40.8 billion. In the past six months, it has gained 11.8% compared with the industry’s growth of 9%.

Let’s delve into the factors that make investment in the company a smart choice at the moment.

Strong Demand for Products: Cintas has been benefiting from strength across the healthcare and hygiene end markets, driven by healthy demand for its personal protective equipment. Solid momentum across the company’s first aid cabinet service, uniform direct sale, and fire protection services businesses has also been driving its performance. In the first quarter of fiscal 2022, (ended Aug 31, 2021) it generated net sales of $1,897 million, reflecting year-over-year growth of 8.6%. For fiscal 2022 (ending May 2022), the company anticipates sales to lie in the range of $7.58-$7.67 billion, indicating year-over-year growth of 7.2% at the mid-point.

Growth Investments: The company’s efforts to enhance its product portfolio and investments in technology and existing facilities are expected to drive its performance in the quarters ahead. Its focus on operational execution, along with cost-control measures and pricing actions, is also likely to help it maintain a healthy margin performance. In the fiscal first quarter, its gross margin increased 30 basis points on a year-over-year basis.

Shareholder-Friendly Policies: Cintas rewards shareholders handsomely through dividend payouts and share buybacks. In the first three months of fiscal 2022, the company repurchased shares worth $659.2 million and paid out dividends worth $79.1 million. Also, it hiked its quarterly dividend rate by 26.7% and approved a share buyback program worth $1.5 billion in July 2021.

Estimate Revisions: In the past 30 days, the Zacks Consensus Estimate for the company’s fiscal 2022 earnings has trended up from $10.61 to $10.82 on five upward estimate revisions against none downward. In addition, the consensus estimate for fiscal 2023 (ending May 2023) earnings increased from $11.81 to $11.98 on five upward estimate revisions against none downward.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Industrial Products sector are Alcoa Corporation AA, Kadant Inc KAI, Nordson Corporation NDSN. While Alcoa currently sports a Zacks Rank #1 (Strong Buy), Kadant and Nordson carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa pulled off an earnings surprise of 42.70%, on average, in the trailing four quarters.

Kadant pulled off an earnings surprise of 22.26%, on average, in the trailing four quarters.

Nordson pulled off an earnings surprise of 17.77%, on average, in the trailing four quarters.


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Cintas Corporation (CTAS) : Free Stock Analysis Report

Nordson Corporation (NDSN) : Free Stock Analysis Report

Kadant Inc (KAI) : Free Stock Analysis Report

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Zacks Investment Research